KARACHI: Geopolitical uncertainties continued to affect the Pakistani shares as the benchmark KSE-100 index registered its seventh consecutive week of decline.

The market’s downturn was largely attributed to a lack of positive economic developments and the ongoing delay in finalising a Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) for the third review of Pakistan’s $7 billion Extended Fund Facility (EFF).

The KSE-100 index began the week with volatility, sharply falling on Monday following a spike in global oil prices. This was prompted by the illegal US-Israel aggression on Iran, which led to closure of Strait of Hormuz. The market later recovered some of its losses, but by the close of Friday, the index had dropped 2.3 per cent to settle at 153,866 points, losing 3,630 points week-on-week.

According to Arif Habib Ltd (AHL), the market’s performance was influenced by a variety of factors, including the uncertain geopolitical landscape, with oil prices surging due to fears of further disruptions in the Middle East. However, the market stabilised after the announcement of a 400 million barrel release from the International Energy Agency’s (IEA) strategic reserves and speculation of easing sanctions on Russian oil.

Index loses 2.3pc as surging oil price and IMF review delay weigh sentiments

Further exacerbating market sentiment, the IMF’s delay in reaching a Staff-Level Agreement under the third review of Pakistan’s economic programme left investors uncertain about the country’s fiscal outlook.

The central bank’s decision to maintain the policy rate at 10.5pc also pointed to growing caution amid the volatile global environment. The State Bank of Pakistan (SBP) refrained from altering its monetary stance, reflecting the challenging situation brought on by regional tensions and unstable commodity prices.

Despite these concerns, certain economic indicators showed positive movement. For instance, remittances in February rose by 5pc year-on-year to $3.3 billion, while the trade deficit stood at $3bn for the same month.

Exports were valued at $2.3bn, a decline of 8.5pc year-on-year, but imports saw a slight reduction of 0.4pc. The overall trade deficit for the fiscal year-to-date increased by 25.3pc.

Meanwhile, petroleum sales saw a 13pc rise year-on-year in February, driven by stronger demand for petrol and high-speed diesel (HSD). Auto sales, too, recorded a 42pc increase year-on-year in February, though they dropped 26pc month-on-month due to the seasonal slowdown during Ramazan.

AHL reported that market participation decreased during the week, with average daily traded volume falling to 548 million shares, compared to 791 million shares the previous week.

The declines in market turnover mirrored investor apprehension as news from the IMF mission was largely inconclusive.

The SBP’s foreign exchange reserves showed a modest increase, rising by $41m to reach $16.3bn. The rupee remained stable against the US dollar, appreciating slightly by 0.03pc to Rs279.31.

Sector performance showed a mixed trend. Refinery, leasing companies, and jute were among the top performers, with respective gains of 5pc, 4.9pc, and 3.7pc. Conversely, sectors such as woollen, paper, and transport recorded losses, with declines of 8pc, 6.8pc, and 6.7pc respectively.

Among individual stocks, AICL, Lotte Chemical Pakistan, and Highnoon Laboratories were top performers, rising by 10.1pc, 9pc, and 7.1pc week-on-week. On the other hand, companies like Sazgar Engineering Works, Fauji Cement, and Murree Brewery saw notable losses, with declines of 13.6pc, 10.6pc, and 10.5pc respectively.

Analysts at AKD Securities noted that the market’s future direction would largely depend on developments in the ongoing Middle East conflict.

They also emphasised the importance of the government’s efforts to address energy conservation and the resolution of the IMF review. In the medium term, a de-escalation of tensions in the region could spur a significant market recovery, especially given the appealing valuations currently offered by the market. The forward price-to-earnings ratio of the KSE-100 index stands at 6.6x.

Published in Dawn, March 15th, 2026